Tuesday May 19, 2020 ~ NATIONAL
by Mary Brooke ~ West Shore Voice News
Today in Ottawa, another layer of financial opportunity for small businesses during the pandemic was announced by Prime Minister Justin Trudeau.
Trudeau announced an expansion to the eligibility criteria for the Canada Emergency Business Account (CEBA) to include many owner-operated small businesses.
“This extended measure will help small businesses protect the jobs that Canadians rely on,” it was stated in a release.
The initial CEBA rollout missed many small businesses:
In the initial CEBA rollout, businesses needed to have an annual payroll no less than $20 million. However, small businesses that are owner-operated often pay themselves by way of dividends, keep the business funds in the company and do not draw a regular salary or do not carry payroll but instead pay contractors for services. This prevented many small businesses from having the opportunity to participate in CEBA.
CEBA offers an interest-free loan of up to $40,000 along with $10,000 of that becoming a grant (no requirement for repayment) if the remaining $30,000 is repaid by the end of 2021.
The Government of Canada says that “throughout the pandemic, it has focused on keeping Canadians safe and healthy and helping families pay their bills”…. “That’s why we have introduced strong measures to protect middle class jobs and support businesses, so they can keep Canadians on the payroll during this challenging time.”
Changes in the CEBA:
The changes to the CEBA will allow more Canadian small businesses to access interest free loans that will help cover operating costs during a period when revenues have been reduced, due to the pandemic.
The program will now be available to a greater number of businesses that are sole proprietors receiving income directly from their businesses, businesses that rely on contractors, and family-owned corporations that pay employees through dividends rather than payroll.
To qualify under the expanded eligibility criteria, applicants with payroll lower than $20,000 would need:
- a business operating account at a participating financial institution
- a Canada Revenue Agency business number, and to have filed a 2018 or 2019 tax return.
- eligible non-deferrable expenses between $40,000 and $1.5 million. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance.
Expenses will be subject to verification and audit by the Government of Canada. Funding will be delivered in partnership with financial institutions. More details, including the launch date for applications under the new criteria, will follow in the days to come.
- Launched on April 9, 2020, the CEBA provides zero-interest, partially forgivable loans up to $40,000 to small businesses that have experienced diminished revenues due to COVID-19, but face ongoing non-deferrable costs such as rent, utilities, insurance, taxes, and employment costs. Twenty-five per cent of this loan is forgivable if repaid by December 31, 2022.
- The CEBA is administered by Export Development Canada, which is working closely with Canadian financial institutions to deliver the loans to their existing business banking customers.
- When first launched, the CEBA was designed to allow for rapid deployment of credit to businesses with 2019 payroll between $50,000 and $1 million. The government then expanded the eligibility parameters of the program, by increasing the payroll eligibility range to between $20,000 and $1.5 million.
- Since the CEBA’s launch, over 600,000 loans have been approved, representing a total of more than $24 billion in credit.
How many businesses have accessed CEBA:
To date, over 600,000 small businesses have accessed the CEBA, and the government will work on potential solutions to help business owners and entrepreneurs who operate through their personal bank account, as opposed to a business account, or have yet to file a tax return, such as newly created businesses.
Addressing middle class jobs:
This measure is part of the Government of Canada’s COVID-19 Economic Response Plan, which is putting Canadians and the protection of middle class jobs first. We will continue to help all Canadians, and together we will get through this crisis.